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Original article, by Barry Grey, via World Socialist Web Site:

Testifying Wednesday before the Budget Committee of the House of Representatives, Federal Reserve Board Chairman Ben Bernanke demanded that Congress and the Obama administration map out a program of austerity measures to bring down record budget deficits. Bernanke made clear that the heart of this program should be sharp cuts in social spending, including basic entitlement programs such as Social Security and Medicare.

Well, duh! You didn't expect Bernanke to come out in favor of increased social spending, did you? Indeed, austerity budgets are part of the neoliberal playbook. Let the financial institutions plunder a country, and then make that country's population suffer a shrinking of their safety net.

"Maintaining the confidence of the financial markets," Bernanke said in prepared remarks to the committee, "requires that we, as a nation, begin planning now for the restoration of fiscal balance."

I bet he said this one with a straight face. The financial markets are, to a great extent, what have failed us in this crisis of capitalism. I should think it would be the financial markets which need to regain our confidence. Silly me.

The phrase "confidence of the financial markets" is a euphemism for the interests of Wall Street and major international banks and investors. In demanding the preparation of austerity measures to be imposed on the American people, Bernanke was speaking in behalf of the financial elite whose massive taxpayer subsidies have been the major cause of the explosive growth over the past year of the federal deficit and the US national debt.

And it's been Bernanke and the Fed which have been doing most of the shoveling. At least $12.8 trillion has be poured into the financial markets in an attempt to right them. You would think Ben wouldn't be quite so keen to cut our social safety net, if only to be nice to the people who are financing his spending binge.

I'll let you read the rest of the article. You'll read how unemployment is expected to continue to rise at an astounding rate. You'll read how the Obama administration's policies fit rather nicely with Bernanke's vision. You'll be left to wonder how well allowed this to happen to ourselves, and what we're going to do about it. You'll also be left to wonder how the US economy ever got to the position of being on the precipice of being a third world economy.

Originally posted to rjones2818 on Thu Jun 04, 2009 at 03:58 AM PDT.

Poll

Cut social programs or funding for the financial markets?

3%6 votes
78%132 votes
6%11 votes
6%11 votes
4%7 votes
1%2 votes

| 169 votes | Vote | Results

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Comment Preferences

  •  Tip Jar! (30+ / 0-)

    For every penny cut from social programs, there should be a penny's worth of re-regulation of the financial industry.

    Don't blame me, I support Dennis! http://kucinich.us

    by rjones2818 on Thu Jun 04, 2009 at 04:00:16 AM PDT

    •  It might be nice if the banks were (6+ / 0-)

      on the table being sliced up and eaten.

      Instead of us.

      Thin slices are best. Steak tartare.

      Hyperinflation is coming. Read up on Zimbabwe.

      Thats why we need single payer now.

      People in this nation die due to lack of health care. The estimates vary from 18,000 to 100,000 a year, depending on how you measure preventable deaths

      by Andiamo on Thu Jun 04, 2009 at 04:13:34 AM PDT

      [ Parent ]

    •  The social program they need to cut... (19+ / 0-)

      Is low marginal tax rate subsidies for rich people.

      I am here to represent the democratic wing of the Democratic Party.

      by Josiah Bartlett on Thu Jun 04, 2009 at 04:16:16 AM PDT

      [ Parent ]

      •  And I would bet that (6+ / 0-)

        we probably find some money the corps could pay, too.

        Don't blame me, I support Dennis! http://kucinich.us

        by rjones2818 on Thu Jun 04, 2009 at 04:17:45 AM PDT

        [ Parent ]

      •  It's Much Worse Than a Social Program (8+ / 0-)

        It's an ownership transfer program.

        I don't think it's ever been proven that top marginal rates as low as 70% are safe for a country long-term.

        JFK cut them down to that level, and by the time of Carter the pressure for deregulation was affecting policy. That pressure probably came from the recognition that marginal rates were low enough that get-rich-quick schemes at the top end could now get people rich quickly.

        There's such a thing as too much income too quickly, which we proved before TR, and again after we cut our first 90+% top rates in the 20's, possibly after JFK cut them a little, and certainly again over all the years since Reagan cut them again in the 80's.

        As I've quoted the trader asked last year or before about the wild investment schemes everyone was selling, "there was simply too much money to be made." Over and over we've proven that this behavior doesn't happen when we don't let that money be kept.

        High marginal rates are a basic national security measure.

        Fool me four times, shame on me.

        We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

        by Gooserock on Thu Jun 04, 2009 at 04:51:51 AM PDT

        [ Parent ]

        •  Good points Gooserock... (2+ / 0-)
          Recommended by:
          TracieLynn, chrome327

          I've written several longer posts on how the reduction in the top rates caused a huge shift to short term thinking and the resulting destructive behavior.

          Who needs a long term plan when a few short term killings and you're set.

          I am here to represent the democratic wing of the Democratic Party.

          by Josiah Bartlett on Thu Jun 04, 2009 at 06:50:49 AM PDT

          [ Parent ]

        •  Marginal tax rates v effective tax rates (1+ / 0-)
          Recommended by:
          Josiah Bartlett

          I wish I could find, and at some point I may be able to, a chart that compared stated top marginal rates and the actual effective rates people paid.  My own personal experience only goes back to the 1970's but I think the data would be significant. Just on a personal basis in the early 1980's the top marginal rate was 70%. I was in the top 1% at that time. My actual effective federal tax never reached 10% until the Tax Reform Act of 1986. While the TRA lowered my rate from 70% to 28% it actually raised my effective rate from 10% to 28%. The discussion of historical stated top marginal rates without a discussion of what top earners actually paid is an incomplete analysis.

          "let's talk about that"

          by VClib on Thu Jun 04, 2009 at 08:50:55 AM PDT

          [ Parent ]

    •  IMF style economics (1+ / 0-)
      Recommended by:
      TracieLynn

      always requires bailing out the financial interests while at the samew time gutting social spending.  That this is now coming home to roost is a certain kind of karma coming home to roost in America for every IMF "structural adjustment program" in every Third World nation where the US was the iron fist in the background.

      "When the government becomes a lawbreaker, it invites every man to become a law unto himself." ~ Justice Brandeis

      by ActivistGuy on Thu Jun 04, 2009 at 07:24:40 AM PDT

      [ Parent ]

  •  Well, the alternatives to reduced social spending (5+ / 0-)

    are severe inflation or higher taxes. Europeans choose to fund good social spending with high taxes. So, obviously the USA needs highter taxes, especially more progressive ones. However, American elected officials have great reluctance to increase taxes.

    I voted with my feet. Good Bye and Good Luck America!!

    by shann on Thu Jun 04, 2009 at 04:10:14 AM PDT

    •  you mean a great reluctance (4+ / 0-)

      to do anything at all unless it helps big business

    •  Higher taxes (4+ / 0-)
      Recommended by:
      TracieLynn, chrome327, smiley7, Ojibwa

      considering businesses pay some of the lowest rates in the world by sheltering alot of their profits overseas and such, I'd say it's about time they pay their fair share.

      Also Social Security can be fixed by simply imposing a flat tax on ALL income and eliminating the cap.

      Medicare can be fixed by taking th for profit corporations out of th mix.  Same goes for the prescription drug plan.  Allow reimportation, limit how much pharma corps can charge and voila costs come down.  It's no coincidence that when repubs tinkered with Medicare the costs ballooned.  they wanted it that way so future admins would be forced to cut it.  Roll back all their tinkering and Medicare will be much better off.  

      This is your world These are your people You can live for yourself today Or help build tomorrow for everyone -8.75, -8.00

      by DisNoir36 on Thu Jun 04, 2009 at 05:48:58 AM PDT

      [ Parent ]

      •  What would help is a clear deliniation between (2+ / 0-)
        Recommended by:
        chrome327, smiley7

        Corporate income and personal income. The Private Equity gang is a really good example, as what appears to be personal income for them is treated as Capital Gains by the tax code. I used to buy the bullshit that it is "not efficient" to tax capital, but it seems that capital is in the eye of the beholder, or better stated the definitions in the IRS regulations.

        I'm unsure that we must go back to 70% top marginal tax rates, but I am sure that when Warren Buffett pays a lower marginal tax rate than most of his office staff, it goes beyond "wrong" - it is squarely in the realm of institutional corruption.

        Single Payer and WPA 2.0...NOW!!!

        by Egalitare on Thu Jun 04, 2009 at 06:12:22 AM PDT

        [ Parent ]

      •  the cap is screwy (0+ / 0-)

        I never understood the SS tax cap, which is ridiculously low.

    •  Republicans (2+ / 0-)
      Recommended by:
      shann, chrome327

      have everybody convinced that taxes are somehow bad and that everything can be fixed if we get rid of taxes. Liberals seem to be afraid to talk about taxes. I think its time to have a realistic talk about taxes--not the emotional blah=blah=blah that we hear from the right wing, but a honest appraisal of what taxation is all about.

  •  Got a better source? (4+ / 0-)
    Recommended by:
    burrow owl, Glinda, TooFolkGR, rjones2818

    The World Socialist Website isn't a very respected news source, as far as I know.  The image of Bernanke "demanding" anything from congress or the administration doesn't jive with what I've seen of the guy over the last several years.  Since when do Fed Chairmen demand policy changes?

    "You must be the change you wish to see in the world." -Gandhi

    by Triscula on Thu Jun 04, 2009 at 04:13:24 AM PDT

  •  sure he does (1+ / 0-)
    Recommended by:
    rjones2818

    it would be crazy to save some money on the military front right, unthinkable. take it from those who have no lobby and cant defend themself  
    that is so truely american (weapons first)
    but be carefull cheap employees without healthcare are a worstcase scenario when it comes to pandemic projections but never mind
    btw did he asked for taxcuts to have some tickle down fx

    •  disposable people (6+ / 0-)

      we are expendable

      People in this nation die due to lack of health care. The estimates vary from 18,000 to 100,000 a year, depending on how you measure preventable deaths

      by Andiamo on Thu Jun 04, 2009 at 04:15:59 AM PDT

      [ Parent ]

      •  Bingo. (2+ / 0-)
        Recommended by:
        LordMike, chrome327

        Don't blame me, I support Dennis! http://kucinich.us

        by rjones2818 on Thu Jun 04, 2009 at 04:16:54 AM PDT

        [ Parent ]

      •  you should ask the (0+ / 0-)

        french monarchy what expendable people are able to achive if you treat them bad enough

      •  THAT's the dirty secret of capitalism (3+ / 0-)
        Recommended by:
        Andiamo, chrome327, Egalitare

        where human beings are just a factor of production -- "labor" or "human capital." This creates a logic where the system seeks equilibrium at the point where the cost of sufficiently skilled and productive labor is minimized. Sometimes this is outright slavery, but this only works for tasks where skills and productivity are unimportant. For higher-skilled tasks, where the capital already invested makes productivity important (more "bang for the buck"), you need more motivated, healthier and skilled "labor" (i.e., people) and more of the surplus (i.e., wealth) is shared by the "owners" of capital (which is really the surplus produced collectively in the economy as whole) to achieve that level of "labor" or "human capital."

        Seeking this equilibrium point where the absolute minimum is spent to purchase the required labor is what cutting social programs is all about. The logic of the system is completely amoral and couldn't care less whether any one of us lives or dies -- just look at all the diaries with health care horror stories.

  •  Hyperinflation as soon as 2010 (1+ / 0-)
    Recommended by:
    rjones2818

    People in this nation die due to lack of health care. The estimates vary from 18,000 to 100,000 a year, depending on how you measure preventable deaths

    by Andiamo on Thu Jun 04, 2009 at 04:15:04 AM PDT

    •  Blah... (1+ / 0-)
      Recommended by:
      Egalitare

      Inflation is easy to check, deflation, not so much... We are in a period of deflation...  I think a lot of people forget that little fact.

      BTW, I'm close to 40 years old and have NEVER experienced deflation in my lifetime.

      DARTH SPECTER: I am altering the deal! Pray I don't alter it any further!
      LANDO REID: This deal keeps getting worse all the time!

      by LordMike on Thu Jun 04, 2009 at 06:14:02 AM PDT

      [ Parent ]

  •  This should at least mean Bernanke won't be (3+ / 0-)

    re-nominated to be head of the Fed when his tenure is up.

  •  Require Every Wall Street Executive (1+ / 0-)
    Recommended by:
    MariaWr

    to support a certain number of unemployed people, starting with their relatives, after the safety net gets cut.

    P9D1A1 http://tinyurl.com/lj97l7

    by JG in MD on Thu Jun 04, 2009 at 04:30:12 AM PDT

  •  "Give to the insatiable." (1+ / 0-)
    Recommended by:
    chrome327

    Flavius Rufinus (ca. 335 – November 27, 395) was a fourth century Eastern Roman statesman of Gaulish extraction who served as the Praetorian Prefect for the emperors Theodosius I and Arcadius.

    Rufinus served as consul in 392 before becoming Praetorian Prefect at Constantinople. During the period immediately after Theodosius' death in January 395 Rufinus was virtually the ruler of the Eastern Roman empire, since he exercised great influence over the young and weak-willed Emperor Arcadius. He attempted to further join himself to Arcadius by marrying his daughter to the young emperor, however this plan was stymied by another of the imperial ministers, Eutropius. Outwardly loyal, he was a traitor. In early 395 he had a secret meeting with Alaric outside Constantinople. Shortly afterward, Alaric and his Visigoths ravaged Thrace, but spared the holdings of Rufinus. Probably under orders, the military in the area did not oppose Alaric, who then moved his forces west (395). Rufinus' negative influence over the Eastern Empire came to a violent end on 27 November 395 when he was assassinated by Gothic mercenaries under Gainas. Rufinus had hated the western magister militum Stilicho, and his influence over Arcadius prevented Stilicho from crushing Alaric when the Roman general had the chance. Stilicho had trapped Alaric and the Visigoths in Greece (395), but was commanded by Arcadius (Rufinus) to vacate eastern territory. Stilicho loyally obeyed the order and returned his forces west across the border.

    from wikipedia
          Rufinus was responsible for the empire's tax policy and was particularly hated by the population of Constantinople. He was eventually murdered in a riot in a manner in keeping with local customs(see the gruesome end of Andronicus Commenus), dismembered and his hand was taken door to door around the city with the plea, "give to the insatiable." , as if a plea for a charitable contribution. (From somewhere in the first volume of "Later Roman Empire by J B Bury)

    That's America, buddy! So wake up -- to your only logical choice: Me. George Tirebiter

    by irate on Thu Jun 04, 2009 at 04:39:53 AM PDT

  •  Actually I do think we do need to worry about (2+ / 0-)
    Recommended by:
    HarlanNY, Seeds

    debt down the road.

    However, the biggest amount of debt down the road is the cost of health care.

    "Because we won...we have to win." Obama - 6/6/08. WELL WE DID IT!!! 11/4/08

    by Drdemocrat on Thu Jun 04, 2009 at 04:48:09 AM PDT

  •  Entitlement programs? (7+ / 0-)

    I am livid at SS and Medicare being classified along with the various programs of welfare assistance. The latter should be called something else.
    I am entitled to them, I've paid my whole working life for them! They are owed to me, the same way the bank owes me my deposits when I request them.
    God damn right wing bullshit.
    Nice change there, Obama.

  •  Take a hike, Bernanke. Money for banks (2+ / 0-)
    Recommended by:
    chrome327, Floande

    and military are fine, but no money allowed for everyone else.  That's the Bernanke budget.

  •  Well of course he wants to cut social programs. (4+ / 0-)
    Recommended by:
    TiaRachel, chrome327, Egalitare, Floande

    He doesn't use them, so probably no one else does either, right?

  •  He said that social security and medicare need to (1+ / 0-)
    Recommended by:
    theran

    be fixed over the long term, and that taxes shouldn't be so high that they impede growth.  

    Not much to disagree with.

    We are building a team that is continuously being built. - Sarah Palin

    by burrow owl on Thu Jun 04, 2009 at 05:49:43 AM PDT

    •  Except the last time we "fixed" SSI (1+ / 0-)
      Recommended by:
      chrome327

      it ended up being cover for a massive redistribution of the tax liability from the wealthy to the rest of us.

      The whole premise of "taxes being too high" is a sham. Every time the monied classes in this country have been allowed to accumulate a disproportionate share of the National Income, they've pissed it away in high finance gimmicks that are not designed to seek out and support new ideas, products and services but simply to say "my pile of cash is bigger than yours" for a few brief moments in time.  Giving them less Monopoly money to play with is doing all of us a favor.

      Single Payer and WPA 2.0...NOW!!!

      by Egalitare on Thu Jun 04, 2009 at 06:25:00 AM PDT

      [ Parent ]

    •  I wasn't aware of any evidence that taxes... (2+ / 0-)
      Recommended by:
      chrome327, smiley7

      ...could impede growth.

      I know that many people believe this.  It is an article of faith on the Right.  But faith appears to be all they have based it on, as there is no empirical evidence that this is true.

      If we spend the taxes on Healthcare, Infrastructure, and Education, we will be creating growth.  Bernanke has a backwards world-view.

      •  Nobody disputes it. (0+ / 0-)

        Or, rather, no one disputes that, say, a 99% tax rate would slow growth materially.

        The real question is what kinds and sizes of tax rates will materially slow growth.  Conservatives put that pretty low (the notion that a return to Clinton-era rates will cause a noticeable slowdown in GDP growth is dubious), liberals put it higher.

        Interestingly, Christine Romer, one of Obama's econ advisors, distinguishes between types of tax hikes.  Those that are used to fund ongoing programs do, per standard econ, slow GDP growth; tax hikes used to pay down inherited debt, OTOH, can marginally increase that growth. (presumably because the markets are anticipating lower interest rates, greater stability, etc. etc.)

        We are building a team that is continuously being built. - Sarah Palin

        by burrow owl on Thu Jun 04, 2009 at 06:38:59 AM PDT

        [ Parent ]

        •  99% is theoritical. (1+ / 0-)
          Recommended by:
          chrome327

          We could also assume that a 0% tax rate would hurt the economy as there would be no roads, military, cops, or schools.

          We should never conceede the idea that tax cuts are always, usually, or even possibly good.  This is one of the bedrock assertions of Republicanism, yet it is grounded only in weak (if any) evidence.  It needs a good hard reality-based kick every time we get the chance to give it one.

          Any talking head, CEO, or Fed Chairman who says "lower taxes help the economy" should never be allowed to slide.  They should always be called out on it, made to show their numbers and equations, and they should always have their "premises checked".

          Progressives have taken this lying down long enough.

          •  You just misread Bernanke, then. (0+ / 0-)

            He didn't say "lower taxes always help the economy."  He said that taxes shouldn't be so high that they hurt more than help.  

            We are building a team that is continuously being built. - Sarah Palin

            by burrow owl on Thu Jun 04, 2009 at 07:49:46 AM PDT

            [ Parent ]

  •  You missed an option: Raise Taxes (4+ / 0-)

    If Bernanke demands that the budget be balanced, by all means, let us do so!  We must raise taxes until the deficit gap begins to close.

    Anyway, I recc'd this Diary, if for nothing else, than the line: "I should think it would be the financial markets which need to regain our confidence."

  •  Cut the Security State Budget (0+ / 0-)

    How about taking on the intelligence budget and out-of-control growth of the security state. It's the biggest black hole of entitlements:

    * The intelligence budget exceeds $60 billion per year (comparable to the what the Chinese military spends each year). Roughly $42 billion of that goes to outsourced contractors.

    * About 4 million citizens have security clearances to work on classified projects vs. 1.8 million in federal civilian jobs.

    Neither Democrats or Republican have the courage to tackle this beast...and instead, will go after social programs.

    Source: Blank Spots on the Map: The Dark Geography of the Pentagon's Secret World by Trevor Paglen

  •  End Welfare completely (2+ / 0-)
    Recommended by:
    TracieLynn, zenobia

    for corporations and foreign countries.

    Then cut the military budget by 95%.

    Then we can talk about cutting social programs.

    Freedom of speech does not mean the freedom to lie without consequence; unless, apparently if you're a right wing talk-radio host.

    by Whimsical on Thu Jun 04, 2009 at 06:10:24 AM PDT

  •  Does this crooked clown Bernanke plan (1+ / 0-)
    Recommended by:
    TracieLynn

    on letting the Bush Tax Cuts expire next year? How come we hear very little about them?

    Love, Peace, & Reggae--t-shirt slogan

  •  How about we cut Bernanke's salary? (1+ / 0-)
    Recommended by:
    zenobia

    $1 a year sounds about right.

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